Tesla: Elon Musk links long-term pay to company’s growth

Elon Musk, founder of the electric carmaker Tesla, has agreed a new salary package based on it becoming one of the world’s most valuable companies.

His pay will be tied to growth in Tesla’s stock market value, starting at $100bn (£72bn) and rising to $650bn.

To receive maximum remuneration, Tesla – now valued at $60bn – would have to be six times bigger than Volkswagen.

As well as growth in Tesla’s market value, Mr Musk’s pay will also be linked to 12 revenue and profit goals.

The plan needs to be signed off by shareholders in a vote in March.

Not driven by money

The proposal is similar to the structure of his last salary package, which was put in place in 2012.

Under that plan, Mr Musk was awarded stock options that vested only if the company continued to perform well and reach certain milestones.

The polymath entrepreneur has said many times before that he is not driven by money.

Tesla expects to pay him $49,920 in 2016-17, but he says he does not cash the cheques. Instead he lives off loans made against the value of his shares. The value of his stake in the business is $11.8bn.

Nevertheless, Tesla’s new plan is quite a challenge.

The company continues to lose money and at one point last year was leaking almost $500,000 an hour.

Its future hangs on the Model 3 sedan, but Tesla has struggled to ramp up production of the most affordable electric car in its range.

The company made only 260 in the third quarter of last year because of what it called “production bottlenecks”, when it had planned to build more than 1,500.